- Greek Political Leaders Agree On Austerity Reforms
- ECB Holds Rate, Relaxes Rules for Long-Term Loans
- Wholesale Trade Up 1 Percent in December
- Jobless Claims Drop 15,000, Stay on Downward Trek
- States Negotiate $26 Billion Deal for Homeowners
- Two Top Ford Executives Set to Retire
- 12 Unique Dating Sites
- Bank of England to Print More Money to Boost Recovery
- White House's Jobs Forecast Out of Date as It's Issued
- China’s Steelmakers Set for Turnaround: Analyst
- Bulls Bet Silicon Motion Will Bounce
- News Corp. Beats Estimates on Studio, Cable Strength
- Bindi: Charm is Not Enough for Italy's Prime Minister Mario Monti
- Tobacco Stocks a Hot Dividend Play: Analyst
- Is Apple Coming to Sam’s Club Stores?
- Gas Prices in All 50 States Back Above $3 a Gallon
- Is America Ready for a Bacon Milkshake?
- As Mortgage Refinancings Surge, Banks Struggle
MOST SHARED
- Greek Political Leaders Agree on Bailout Reforms
- Jobless Claims Drop 15,000, Stay on Downward Trek
- US Jobs Gap Between Young and Old Is Widest Ever
- What's Shaking: Thursday's Early Movers
- Premium Commanded by Whole Foods Ridiculous, or Surprisingly Modest?
- Pepsico to Cut 8,700 Jobs; Quarterly Earnings Rise
- A Greek Deal, but What Is the Deal?
- Take That: Best Tax Breaks to Grab Now
- States Negotiate $26 Billion Deal for Homeowners
- Zuckerberg Takes Control, You Get $100
MOST POPULAR
HOT ON FACEBOOK
Market Outlook: Subprime Concerns Still Hang Over Market
Text Size 
The fallout in the subprime mortgage industry continues to trouble the stock market, and analysts expect the issue to be at the forefront of investor concerns next week.
A high level of subprime delinquencies reported this week and problems at subprime lenders rippled through the market. Some analysts worry a meltdown in the subprime market could spread to the broader banking industry and throughout the housing market.
Most economists in a survey by WSJ.com said subprime turmoil is likely to spread to the broader market, but they predicted the U.S. would avoid a recession.
"I think the main thing next week is the market's obvious concern about subprime and the housing market," Peter Boockvar, Equity Strategist at Miller Tabak, told CNBC.com.
"Recent economic data has reignited the feeling of inflation lurking in the background, but the overriding worry is the focus on the subprime," said Robert Stovall, Managing Director & Global Strategist at Wood Asset Management. "We will continue to see if there are more casualties coming along."
"The people who insure you against loss were willing to do it at a very low cost," Michael Metz, Chief Investment Strategist at Oppenheimer, told CNBC. "Now that you have the subprime problem, which I think is the tip of the iceberg, credit quality generally will deteriorate and the availability of money to marginal lenders will disappear. I think it's a major negative factor."
Housing and the Fed
Analysts expect much of the focus next week to be on the slowdown in the housing market. There will be plenty of data to sift through, including the National Association of Home Builders Housing Index, housing starts and existing home sales.
Investors will also pay close attention to comments from the Federal Reserve. The FOMC begins a two-day meeting on Tuesday and will announce its decision on interest rates on Wednesday.
"I expect both the stock and the bond market will quiet down going into the meeting, but then all eyes will be on the Fed's announcement," said Frederic Dickson, chief market strategist at D.A. Davidson & Company.
"We'll certainly want to see if the Fed has any intentions of doing anything about the subprime mortgage issue," Steve Chapman, vice president of Weiss Capital Management told CNBC.com. "We're looking for comments that may suggest they will take a different tack in dealing with that issue."
Most analysts agree the Fed will hold steady on interest rates.
Invest with Caution
Analysts suggest investors use caution while the markets try to gauge the fallout from the subprime meltdown.
"I would be lightening up on stocks," said Miller Tabak's Boockvar. "I believe the subprime problems will spread to other areas of the economy and affect the housing market and eventually impact the consumer."
"Just hold tight in cash," said Stovall. "You're getting 4+% in money funds. Bottom fishing is dangerous. You don't want to commit your money to equities right now."
Analysts who see buying opportunities in this market are still advising investors to be choosy.
"I think the market being down 6% or so is a good opportunity," Steve Goldman, chief market strategist at Weeden & Company, told CNBC.com. "Investors will be rewarded if they buy on these dips. I still like the materials and the cyclical stocks. They were leaders before the pullback, and I think they will continue to lead."
"We're staying on the defensive," said Dickson. "We see some fairly significant opportunities for some of the large-cap tech growth stocks that people have hated for the last couple of years such as Intel [INTC
Loading...
()
] and Oracle [ORCL
Loading...
()
]. Another area would be the boring global consumer companies, because they have consistent earnings strength, such as Pepsi [PEP
Loading...
()
] and Proctor & Gamble[PG
Loading...
()
]." Dickson does not own any of those recommended companies and D.A. Davidson has no investment banking relationship with them.
"We're seeing opportunities to buy quality companies at more attractive prices," said Larry Coats, co-manager of the Oaks Value Fund. The fund's portfolio includes Berkshire Hathaway [BRK-A
Loading...
()
], Cadbury Schweppes [CSG
Loading...
()
] and Capital One [COF
Loading...
()
]. "Look for very good businesses with clean balance sheets, trading at good valuations. Tell people to keep the faith."
- New options and disclosures on fees should give workers more control over their retirement savings.
- A pilot program that moves passengers through pre-flight security screening is being expanded to more airports in the US.
- Amy Cappellazzo of Christie's on the red-hot art market. Last year Christie's sold 719 million dollar artworks.
- That’s right, one unaccredited private college is offering free tuition to attract students, over the next four years.
- Many employers are finding that older workers are more reliable than their younger counterparts.
- The Mossad has opened its archives to reveal how its agents captured a notorious Nazi war criminal.
Data is a real-time snapshot *Data is delayed at least 15 minutes
